Accounting for IGCSE & O level - Accounting Procedures (Section 1)
1
How would the error, where a sales commission of $140 was incorrectly posted as $400, impact the draft profit and require a correction?
Answer
(B)
Profit is understated by $260; Debit Suspense, Credit Sales Commission.
2
Which of the following would be found on the balance sheet?
Answer
A
D
3
Which of the following are essential for a valid invoice?
Answer
A
B
C
4
What is the accounting treatment for a cash payment to a supplier?
Answer
(A)
Debit Trade Payables, Credit Cash
5
Which of the following transactions would increase the balance in a purchases ledger control account?
Answer
(A)
A credit purchase
6
What happens in the purchase ledger if a supplier issues a refund?
Answer
(B)
Trade payables decrease
7
What is the impact of recording a credit purchase on the purchases ledger control account?
Answer
(B)
The balance increases.
8
Which document is used to notify a customer that their account has been debited?
Answer
(C)
Debit note
9
The balance on the sales ledger control account should equal the sum of:
Answer
(B)
The sum of balances on the individual trade receivable accounts in the sales ledger
10
A business issues a credit note. What is the impact on its records?
Answer
(A)
Decrease the customer's account.
11
Which of the following is the effect of a dishonored cheque on the customer's account in the sales ledger?
Answer
(A)
The customer's balance increases.
12
Which depreciation method is often used for assets that provide consistent benefits over time?
Answer
(B)
Straight-Line
13
What accounting principle is most directly related to the concept of depreciation?
Answer
(B)
Matching Principle
14
What document is issued to correct an error on a purchase invoice?
Answer
(C)
Debit Note
15
What is the impact on the purchases ledger when a company pays a supplier?
Answer
(C)
The balance in the supplier’s account decreases.
16
How would you classify 'Accumulated Depreciation' on the balance sheet?
Answer
(C)
Contra-asset
17
What happens if a debit is recorded as a credit?
Answer
(D)
The trial balance will not balance.
18
Which is a true statement about capital receipts?
Answer
(B)
Capital receipts only affect the financial position of the business.
19
During disposal, which accounts would normally be debited to close out the asset?
Answer
A
D
20
Control accounts are used to:
Answer
(A)
Check the arithmetical accuracy of the sales ledger and the purchase ledger.
21
When an asset is fully depreciated, its net book value equals:
Answer
(B)
Its salvage value.
22
What is the main purpose of depreciation in financial accounting?
Answer
(B)
To accurately report the decline in value of an asset over time.
23
Repairs \$200 were debited to the premises account. How will it impact draft profit?
Answer
(C)
Profit was understated by \$200
24
What type of error occurred when a payment for electricity expenses was recorded as a profit?
Answer
(A)
Error of Principle
25
What is the effect of a customer returning goods for which they paid cash?
Answer
(C)
Debit cash, Credit sales returns.
26
Which of the following would increase the debit side of a sales ledger control account?
Answer
(A)
Credit sales
27
In the case of compensating error, which of the following statement is true?
Answer
A
D
28
What is the formula for calculating depreciation using the straight-line method?
Answer
(A)
(Cost - Residual Value) / Useful Life
29
What happens in the sales ledger when a credit note is issued to a customer?
Answer
(B)
The customer's account is credited.
30
Which of the following statements is correct regarding a Sales Ledger Control Account?
Answer
(C)
It provides a summary of the total amount owed by all credit customers.
31
Which of the following statements regarding the Sales Ledger Control Account are correct?
Answer
A
C
32
Which journal is used for recording credit purchases?
Answer
(B)
Purchases Journal
33
The correct impact of recording an annual depreciation charge of $4,000 that was overlooked is:
Answer
(C)
Decrease in Profits
34
Drawings of \$3000 were not recorded. How will it impact draft profit in the below scenario?
Answer
(A)
No impact
35
The error means that the balance include due trade payables accounts for \$449 and the purchases account have \$400 more than they should have from \$14,449 in the sorted balance. To select the error both balances had to be reduced by \$449.
Answer
A
C
36
Which statement describes a debit balance in the purchase ledger control account?
Answer
(B)
The business owes the supplier money.
37
A company sells goods for cash. What is the accounting entry?
Answer
(B)
Debit Cash, Credit Sales
38
Which document should be issued by a business to notify a customer that their account is being credited?
Answer
(B)
Credit note
39
What is capital expenditure?
Answer
(B)
It is the cost of buying or acquiring non-current assets.
40
If an asset is revalued downwards, what happens to the Accumulated Depreciation?
Answer
(B)
Decreases
41
What is the impact on the accounting records if a customer is granted a discount?
Answer
A
C
42
When a company uses the revaluation method, and the value of the asset decreases, what should the company do?
Answer
(A)
Debit the income statement, credit accumulated depreciation
43
What is the advantage of the straight-line method of depreciation?
Answer
(B)
It is a relatively simple method of depreciation.
44
What does the sales ledger control account show?
Answer
(B)
The total amount owed by customers.
45
If a company allows interest charges to be added to a customer's overdue account, what is the impact on the accounts?
Answer
(B)
Debit Customer's account, credit Interest income.
46
A company sells equipment for less than its net book value. This results in:
Answer
(C)
A loss on disposal
47
What is 'net book value'?
Answer
(C)
The asset's cost less accumulated depreciation.
48
Which of the following transactions would increase the balance in a purchases ledger control account?
Answer
(C)
A credit purchase.
49
What impact does recording repairs to the premises account have on the draft profit?
Answer
(B)
Profit is understated
50
What is accumulated depreciation shown on the statement of financial position?
